Thank you for standing by. Welcome to the Coronado Global Resources 2023 half year results presentation. All participants are in a listen-only mode. There will be a discussion of results from the CEO and CFO, followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Andrew Mooney, Vice President, Investor Relations and Communications. Please go ahead.
Thank you, operator, and thanks everyone for joining Coronado's 2023 half year investor call. Today, I'm joined by our Managing Director and CEO, Douglas Thompson, and our Group CFO, Gerhard Ziems. Today, Coronado released its half year financial results to the ASX and SEC, including its Form 10-Q financial statements, half year earnings release, and results presentation. All of these materials are available for free on our website at www.coronadoglobal.com. Within our results presentation, you will see our important notices and disclaimers and reconciliations of non-U.S. GAAP financial measures. We encourage you to review these statements as well as our other filings on the ASX and SEC. Coronado also quotes all numbers in U.S. dollars and metric tons unless otherwise stated. I'll now hand over to Douglas.
Thanks, Andrew. Our strong production performance from our operations in the June quarter saw Coronado post a half year group revenue of $1.5 billion. This is the second highest half year revenue in the company's history. The strong performance year to date comes despite headwinds in the half. Higher royalty rates, global inflationary pressures, and a met coal price falling below the record highs experienced in 2022. Our teams continue to demonstrate their and our plans resilience to overcome weather-related difficulties at the start of 2023. Our half year sellable production for the group was 8.2 million tons, reflecting a 10% improvement on the prior year.
Production improvements are due to our sustained operational excellence at our U.S. operations, as well as improved mining conditions at Curragh, which saw the team realize the full potential of our One Curragh plan. Testament to our people, management, and leadership, our team also recorded a 16% improvement in safety performance. We remain well below the relevant industry benchmarks in this regard. Our business is in an excellent position to deliver on the next phase of growth. We are fortunate to have a number of organic growth opportunities in Australia and the United States, reflecting and offering efficient use of capital and fully utilizing the talented skills of our people and the experience within the business. Based on the successful completion of our plans, Coronado Group will produce 20.5 million tons by 2025.
While we are aiming to significantly increase production over the next two years, we are also committed to reducing our emissions. Our projects afoot have us on a path to deliver our goal of a 30% reduction in emissions by 2030. Thanks to our strong balance sheet, we are well positioned to potentially pursue inorganic growth opportunities. However, as proven by our track record, we remain committed to a disciplined approach to growth, be it organic or inorganic. Our company remains in a strong net cash financial position, and today we declare our biannual fixed dividend shareholder return of $0.005 per CDI. Subject to the delivery of our growth plans, ongoing operational performance, and market conditions, the board will decide if future special dividends shall be declared as the company has done in the past.
Our company has grown substantially over the past decade, producing nearly 1.5 million tons from Greenbrier in 2013. Now where we stand, our 2023 production guidance between 16.8 million-17.2 million tons remains unchanged. As I mentioned earlier, we have tangible plans in place to organically grow our business to 20.5 by 2025. We are, and seek to continue to be, a leading international producer of high-quality met coal. Met coal, an essential element in production of steel, will continue to be that for a long time to come. "Steel starts here" is our met motto, and this continues to ring true. The inherent chemistry of steel production requires both iron ore and met coal, and these commodities, as a result, underpin the existing uses of steel.
Be it automobile, transportation, infrastructure, buildings, almost every aspect of our lives is touched by steel. Steel is also a critical commodity in the development of a low-carbon environment. As shown on the slide, McKinsey's research shows that steel is the number 1 critical commodity used in the development and advancement of renewables for a low-carbon future. Steel is used in almost every aspect of our lives. In 2023, it is estimated that the total global steel production from blast furnace processes will be 1.3 billion tons. This level of steel production sustains the current traditional infrastructure development. The ever-increasing demand of renewable infrastructure will drive increased demand for steel. To produce 1.3 billion tons of steel, 1 billion tons of met coal is required, making met coal a critical mineral for renewable transition.
Market research indicates that the total global crude steel production is forecasted to increase by 13% to 2.2 billion tons by 2050. The method of generating will overwhelmingly continue to be blast furnace, securing the long-term future of high-quality met coal for at least the next 20 years. Simply stated, met coal has a long-term future, and high-quality, long-life producers such as Coronado will continue to serve the need of the market for some time to come. Coronado is well-positioned. Our resources are in the top met coal locations in the world, and we continue to maintain long-life operating assets in excess of 20 years, and met coal resources exceeding 2 billion metric tons. This strong reserve and resource base secures our position as the premier pure met coal business on the ASX.
To ensure we get the best from our people and the best people, we as Coronado, need to ensure that our people feel safe in all aspects of the term. I'm proud of the passion and the effort by our people in this regard, but we remain vigilant and focused on the task at hand. The Coronado Group total recordable incident rate as of June 2023, was 1.09, compared to 1.29 at the end of June 2022. This is a 16% improvement year on year, is actually the group's best performance since May 2018. In Australia, our total recordable injury frequency rate was 2.52 compared to 4.08. This is a 38% improvement year on year.
In the U.S., our total recordable incident rate was 2.05 compared to 2.01. Our recordable rates in Australia and the U.S. remain well below relevant industry averages. Year to date, our business has some notable achievements in this regard. In the March quarter, the Cannon Preparation Plant achieved 1 million man-hours and 10 years TRI-free. In the June quarter, the Logan Complex achieved 1 million hours LTI-free. These are both tremendous results for the business. As a business, we continue to strive for further improvements in safety. An example of this is our dragline proximity awareness projects at Curragh.
The outcome of this project is to reduce the risk of personnel and equipment interactions, and we are rolling out this technology now that we've proven it, to all four of our draglines and strive to have this completed by the end of the year. Our learnings through this project, we are sharing with the whole industry to ensure that we can make our industry safer. I'll now hand over to Gerhard, who will take you through the company's financial performance and a bit of a market outlook.
Thank you, Douglas. Thanks everybody for joining the call. Today I will go into a bit more detail on our financial results for the half year 2023, talk about today's dividend announcement, and also elaborate a bit more on what we are seeing in the met coal markets right now. Coronado delivered strong financial results in the half year 2023, despite the impacts of global economic headwinds from high inflationary pressures and high interest rates, in addition to higher Queensland government royalty rates that were introduced from July 1st, 2022. Liquidity levels for the group are high, and our balance sheet remains in a strong position, leaving Coronado well-placed to take advantage of suitable growth opportunities.
In the first half of 2023, Coronado delivered a group revenue of $1.5 billion, adjusted EBITDA of $352 million, and a net income of $199 million. Despite achieving the record, second highest first half revenues in the history of our company, the group revenues were lower than the record levels achieved in the last year. This is reflective of our 37% fall in Australian met coal index price year to date, partially offset by higher met coal price realization at our operations of 78%, compared to 63% last year.
Higher mining costs per ton are due to inflation, higher government royalties in Queensland, and the impacts of lower production in the March quarter, deferred to subsequent quarters, following the above-average wet weather in January and train derailment on the Blackwater line. Inflation levels as of 30th June 2023 in the U.S. have moderated in recent times to about 3%. However, in Australia, inflation remains high at 6%. We expect average mining costs per ton to trend lower in the second half this year, as the global inflation rates moderate down further and given our second half-weighted production plans. Today, we reaffirm previously announced market guidance, subject to any wet weather or extraordinary events that may occur in the second half of the year.
The focus for the remainder of the year is to deliver second half-weighted production plans to meet this guidance. Turning to Slide 14, we completed the half year with a net cash of $192 million, and available liquidity of $534 million. More than $500 million liquidity, comprising of a closing cash balance of $434 million, and then the undrawn ABL of $100 million. On 3rd August, we successfully completed the refinance of our ABL facility. As part of the refinance, we increased the facility limit from $100 million- $150 million, and extended the maturity until August 2026.
We generated AUD 117 million in free cash flow in the half year, which is net of the payments made for capital expenditure, interest, and AUD 139 million in corporate tax payments during this period. The important one here is that in June, in that quarter, in June, we actually paid AUD 100 million, about AUD 100 million, on Australian tax related to 2022. No doubt that question will come up. You will ask me what was the cash burn in the second quarter? The tax related to last year was a big part of this. As at 30th June, our closing inventory balance was AUD 102 million higher compared to the closing balance in December 2022.
This increase in inventory is due to higher production rates late in the half and timing of sales. This inventory on stockpile is expected to be sold in the September quarter with a return to average stockpile levels by the end of the quarter. Here you see the second reason why we had some negative cash in the second quarter, the high inventory build, particularly in June. Turning to Slide 15. Today, Coronado's board of directors declared a biannual fully franked fixed dividend of $8.4 million, or $0.005 per CDI to shareholders in accordance with our dividend policy. Our business continues to pursue organic and inorganic growth opportunities, and in order to provide the company with maximum flexibility to achieve this strategy, only declares the biannual fixed dividend at this time.
Subject to the delivery of our strategic growth plans, ongoing operational performance, and market conditions, the Board will decide if special dividends should be declared, as the company has done in the past, and then in future periods, a dividend. The dividend record date is 29th August, and payment date is 19th September. Payment date is 19 September. No matching offer to Senior Secured Note holders is required for this dividend. Following the payment of this biannual dividend, we will have distributed more than $1.5 billion in cumulative dividends since listing on the ASX in October 2018. Almost half of that was declared and paid last year. I now move on and talk to what we are seeing in the metallurgical coal and steel markets. On Slide 17, Coronado supports customers on five continents.
Our geographically diverse asset base is located near key rail and port infrastructure, providing access to both domestics and seaborne markets. Our broad range of met coal products are well established and highly valued for their attractive coke-making characteristics. We maintain a diverse, high-quality customer base across a range of global markets, but Asia remains our number one destination for Coronado met coal. In Asia, that's particularly Japan, India, Korea, and then others. 53% of all Coronado coal sales revenue comes from the Asian market. On Slide 18, in the half year, global economic confidence has been low, given the ongoing conflict in Ukraine, the global inflationary pressure, and rising interest rates.
The average Australian met coal index price in the half was $294 per tonne, down 37% compared to the average index price in the same half last year of $467 per tonne. The falls in price year-on-year are linked to increase in supply from Australia, as the Bowen Basin exited the weather season and impacts of store demand as steelmakers lowered steel prices and delayed the procurement of raw materials. However, despite the fall in prices, the average index price remained firm throughout the period and remained well above the historical average index price of $190 per tonne.
Expectations of further stimulus measures and incentives to improve the China real estate market are expected to improve demand and price sentiment in late Q3, as will Indian restocking demand forecast to return following the country's monsoon season and continued growth for planned infrastructure projects. For the remainder of 2023, we expect pricing to remain above the long-term historical average price, with the SGX forward curve projecting Australian index prices greater than $235 per tonne for the remainder of 2023 and into 2024. Turning to Slide 19, global economic confidence is projected to return to the midterm, which will underpin infrastructure projects requiring steel.
India, one of our largest markets, as I highlighted, is forecasting GDP growth rates in 2023 and 2024 of 5.6% each year, with most other key markets, ex-China, forecasting modest growth rates of between 1% and 2%. China GDP rates, while lower, while it's lower than in recent years, are still predicted to be north of 5% in 2023 and 2024. At the beginning of the year, the Indian government announced in its budget that it was prioritizing investment, investment-driven growth, with spend focused heavily on steel-intensive infrastructure projects. Now, the long-term Indian steel growth is projected to increase by 193% to 367 million tons by 2040.
These growth projections bode well for Coronado, given our large, long life reserve base and given India remains one of our largest export customers. Turning to Slide 20. Looking beyond 2023, AME forecasts indicate a 65% increase in global export demand for met coal by 2040. As you can see in the chart, the majority of demand growth is planned to come from blast furnace steel production in India. India is expected to lead all countries in import demand growth due to its significant potential for urbanization and industrialization. India export demand is forecast to increase by 226% by 2040, the majority of which will need to be filled by supply growth from Australia.
As we have stated in prior calls, it is difficult to see how that supply will materialize and match demand, given the limited approvals for new mines in high-quality met coal regions of Australia and North America. In order to meet projected 2040 demand levels, AME forecasts that met coal production from Australia will need to double from existing levels over the time. A lack of supply should ensure higher prices for longer, which places more emphasis on companies like us to continue operating and developing long-term, long-life assets. I will now hand over to Douglas to discuss our organic growth plans.
Thanks, Mike. As we announced on our call last month, in June, the board of directors officially approved the development of our Curragh North Underground Met Coal Project. This project underpins the business's strategy to deliver sellable production of 13.5 from the Curragh complex by 2025. The project has first coal delivery in late 2024 and will be a similar quality of met coal delivered from our open cut operations at Curragh North presently. As per the slide, we'll be utilizing the final open cut highwall in Esprit to directly access the coal seams, thereby significantly reducing the capital expenditure and start-up risk. As a business, we have extensive experience in underground mines. We've operated longwalls and bord and pillar for many years in the U.S. We are leveraging this experience in the development of this project.
The resource estimate for the underground is approximately 48 million long tons, and our plan is first coal from phase one to be delivered in late 2024, and ultimately we produce between 1.5 million and 2 million tons of met coal per year. Future phases of this project has a potential of exporting coal resources under... Sorry, coal reserves under the open cut, out of pit waste dumps. Turning to the U.S. operations, the images on this slide show the progress that we've made to date on the capital works at Buchanan. The construction of the new surface raw coal storage area increases the mine's capacity, and the construction of a second set of skips, which increases hoisting capacity to surface, are well on plan.
Completion of these projects is estimated to be in 2024, ultimately, when complete, increase sellable production from the U.S. segment to 7 million tons by 2025. Combined, the Curragh North expansion project and the Buchanan expansion project will seek to produce sellable production of 20.5 by 2025. Turning to our emissions reduction projects and sustainability achievements year to date. Coronado has directional intent to net zero operational emissions across our business by 2050. Our business is committed to a 30% reduction in Scope 1 and Scope 2 emissions by 2030, this is strengthened by decarbonization projects, which are afoot. In July 2022, Coronado successfully commissioned our first ventilated air methane, or VAM unit, at Buchanan.
Utilizing the latest available technology, the VAM unit converts fugitive methane emissions to carbon dioxide, significantly reducing the mine's carbon footprint. Since commissioning, the VAM unit has destroyed more than 178,000 tons of carbon dioxide with a 94% efficiency rate. This project alone will see us achieve our 30% emissions reduction target by 2030. Given the success of this project, we're well advanced in the installation of an additional unit. We're targeting to install an additional unit by mid-2024 on Vent Shaft eighteen at Buchanan. We, along with our partners, have proven this technology works and it's safe. As Coronado, we're working with the Australian government to bring this technology to Australian underground mines and ultimately deploy it at our Curragh underground mine in the future. Turning to our Curragh North gas pilot project....
This project targets the capture and use of waste mine gas and use it as a diesel substitute in our operating fleets. Year to date, we have completed the drilling of the wells, and we're now moving to the installation of the gathering infrastructure. Our intent is to have this fully commissioned by the first half of 2024, resulting in us capturing the gas to power between five to six trucks at the mine. The truck photographed on the slide has been operating in a trial phase on site, powered by a blend of gas and diesel. This project is intended to not only reduce our emissions at Curragh, but also reduce our costs as we substitute diesel power with gas power for the fleet.
The Curragh team is made up of people who are passionate and committed to create a successful business that delivers for our clients and our shareholders. Our shareholder value proposition is supported by three solid pillars. Firstly, the fact that met coal is a critical material. This commodity touches every aspect of society and is key to the renewable energy transition. met coal finds itself in a market that is in structural shortfall of supply, and the pace of change driven by the energy transition will only exacerbate this shortfall in supply. Curragh is extremely well-positioned, given our long life met coal assets, our high-quality met coal assets. We are there to take advantage of the supply-demand imbalance and resulting pricing environment. Secondly, our operational excellence.
The Curragh team, since inception in 2013, has a proven track record of successfully integrating, operating, and then further developing new assets. We've delivered more than $1.5 billion of distributions to shareholders since listing on the ASX in 2018. This success is driven by our people. People who are empowered by a plan to maximize every opportunity and ultimately drive excellence. We have an organic growth plan, and delivering upon that plan, we can see the business growing to more than 20 million tons by 2025. Our third pillar, capital management. Our commitment to prudent financial management and a strong balance sheet ensures we maintain a sustainable business. Our ongoing commitment to be responsible custodians of the resource is evident in our track record.
We will continue to be disciplined in our approach to investment strategies. The Curragh team, the board, and I are excited to execute our growth plans and deliver for our customers, employees, and shareholders. I'll now turn back to the operator. We'll take your questions.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask a question. The first question comes from Chen Jiang from BofA. Please go ahead.
Good morning, Doug and Gerhard Ziems. Two questions from me, please. Would you please remind us any restrictions from your current Senior Secured Notes, if you would like to increase your, increase your debt facility? Do you, do you have any target gearing level or, or leverage that you are comfortable with? Thank you.
The details on the notes, the details on the notes, you can read up. It's all publicized. If you look at the leverage ratios in there, it's sitting at about 3 times, as well as interest cover, 3 times. As long as we operate-
Thanks.
within these ratios, we can take on debt.
Right. Okay, thanks for that. I guess that's the, that's the restrictions, from the, from the Senior Secured Notes. Okay, thank you.
Yeah.
Yeah, thank you for that. How should we think about your final dividend or full-year dividend? Is your current full-year dividend policy still intact, 60%-100% of your annual free cash flow?
Yeah, that's still intact. If you go back to our capital management strategy, first comes maintaining a strong balance sheet, right? Followed by distributions and then followed by growth. If you look at it, you know, in the quarter, we paid out $74 million in Australian tax for 2022. We had a massive inventory build, so we want to be a little bit more careful on the balance sheet. If you then go back to distributions, we have paid out $700 million last year, so it's about AUD 1.1 billion in dividends last year. Now, we go back at this moment to the fixed dividend.
Then, I also refer to all the growth opportunities that Douglas highlighted. You know, so in that sequence, we manage our balance sheet and distributions to shareholders.
Okay, thanks for that, Doug. Just to clarify, the minimum of 60% of your annual free cash flow remains intact? No change.
That has not changed. That has not changed.
Okay.
60%-100% of free cash flow, distributions to investors has not changed.
Right. Okay, okay, thanks. Good to know. Last question, please. What are the CapEx plans or required for the Curragh gas project to meet the 30% reduction, sorry, emission reduction target by 2030? Are you, are you subject to any Safeguard Mechanism? Thank you.
There's a few things in that question. Firstly, yes, we are subject to the Safeguard Mechanism, and working through that diligently on this project and other projects. The other point, to achieve our 30% reduction in Scope 1 and Scope 2 by 2030, our VAM project in the United States alone at this stage on our trajectory, will help us achieve that goal. As I've said, the success of that project has encouraged us to do the installation of an additional VAM unit in our U.S. operations, and we are seeking to bring that to Australia when appropriate, to include in our underground operations planned at Curragh. The Curragh North gas pilot project is intending to reduce emissions and find a way to use fugitive emissions in a productive way.
Our target at the moment is to substitute diesel use. It's, it's slightly different in intent at this stage, but our capital project through the VAM units will achieve our 2030 commitments, and that capital has been committed previously.
Thanks for that, Doug. May I have a follow-up just on the Safeguard Mechanism? I'm not sure if you can guide us. What are the costs that you are, you are, you are expecting from that?
I beg your pardon? If you could just say again, what is the cause?
Yeah. Any cost associated with the Safeguard Mechanism that in addition to your cash cost? Thanks.
At this stage, is so new, and some of the changes that have come through, particularly in the last couple of weeks, needs to work through the approvals. We've got projects that are already committed. We don't see any additional costs at this stage as we plan to achieve our requirements under the safeguard. Into future years, there will be. Our intent is to have value-adding projects like our gas pilot project, that will not only meet our safeguard obligations, but also reduce cost.
Right. Thanks, Doug. I'll pass down. Thank you.
Thank you. Your next question comes from Nathan Martin, from The Benchmark Company. Please go ahead.
Hey, thanks, operator. Good morning, gentlemen. Thanks for taking my questions. You maintain full year salable production guidance, 17 million tons at the midpoint there. However, obviously, first half salable production and sales, for that matter, were less than half of that. It'd be great to get your thoughts specifically on cadence of shipments in 3Q, 4Q. It'd be especially helpful at Curragh, where you mentioned you expect inventories to draw down to more normal levels by the end of 3Q. Thanks.
I'll let Gerhard talk about our sales, but yes, as you pointed out, we built inventory to the back end of the month of June, and our intent is, in this quarter, to pull down on those sales, and the team has progressed really well on those, I can report already. From a production imbalance, we execute everything according to a plan, as per the One Curragh plan. First quarter was impacted by wet weather. The performance in quarter two at Curragh, particular, that was drier, showed the strength of the plan that we have afoot.
The plan has always been back-end loaded from a production profile perspective, as we cleared some of the maintenance planning at the beginning of the year, but also the anticipated wet, our mine plan had forecast that we knew the first quarter will probably be wet. The, the plan had a second-half loading from, from Curragh's mine plan perspective. Gerhard, do you want to say anything about that?
Yeah. Look I think the key for us is really, we are reviewing the mine plan right now. It's a lot of inventory build back-ended in particularly in December. Two things will happen. If we can phase it forward into October and November, you generate simply more sales, number one. With higher sales, phasing that into October, November, we can actually also meet our cost guidance, because that's the denominator of our cost guidance, the sales guidance. We need to achieve, we need to achieve through the mine planning, we need to achieve the phasing into October, November to achieve the guidance on both. At the moment, that's possible. That's why we maintain guidance.
Got it. Very helpful, guys. Appreciate that. Maybe next question on the pricing front. This touched on a little bit in the production call, I believe, a couple weeks back, your realized price per ton in the quarter was down sequentially, both in the U.S. and in Australia. Gerhard, I think you previously noted on the first quarter call that net realizations should be higher quarter-over-quarter in 2Q due to one quarter lag pricing on Coronado's contract. Just curious what was kind of behind the decline there? Do you have any directional thoughts for 3Q realized pricing at this point? Thanks.
Yeah, well, two things. One, in the U.S., we had more FOR sales. That's kind of mixing up, and FOB achieved the prices or, or that gets washed up in that mechanics. Then in Australia, we had a little bit of different product quality. Probably a little bit more production of PCI and semi products dragged down the price realization compared to prior quarters.
Do you expect that, that product mix to return to more normal levels, I guess, in the back half of the year, then?
Yeah, absolutely. We see that already in July, you know. Yes, absolutely.
Okay, great. Then maybe just shifting to the, the global met markets. You know, Gerhard, you spoke about, you know, the met markets some in your prepared remarks, but, you know, recently we've seen the FOB Aussie price increase to start the quarter. CFR China price has also strengthened, but the U.S. indices have been moving, you know, kind of in the opposite direction. It'd be great just to get your take on these dynamics, especially that, that widening of the spread between the Atlantic and Asian markets, and I think maybe especially of interest as we approach the domestic U.S. met coal contracting season.
Yeah. I think there's a number of elements in there. What, what you see is if you just focus in Australia at the moment, then you see already that the PCI and the semi-soft have drifted away from the premium global index. You know, similar to what I actually predicted for the future. We can see... I think it's at the moment, just a snapshot, but if you look at the PCI, it's sitting today at 63% of the benchmark. Remember last year, that was sitting about above 100%, and semi sits at the same level. For some reason we see probably large supply or less demand for PCI in the market. I mean, then you go back into who is the biggest PCI offtakers. Probably India is a large one, very large one.
You know, India is supplied by Russia. At the same time, India at the moment, the demand is, is pretty low because of the monsoon season. I think the 63% is really a snapshot in time. It might spring back. The long-term average is about 72%-73%, but last year, again, last year it was sitting at above 100%. If you look at the U.S. East Coast index, I mean, that was for a long time, on par with the Australian FOB, sitting at 87% right now, a reflection of reflection of market at the moment. Again, you know, the only, the only economies that are a little bit promising at the moment are really India, and India is in monsoon. China is actually not, at, at this stage, not too promising.
When you look at the CFR, it sits at about, you know, what, $5 higher than, than the Australian FOB. That's a clear indicator that there's not a lot of demand out of, out of China. That's what we see in the market. Some promising signs, but not too much, you know. Right now, if you look at all steel economies, be it the U.S., be it Europe, I mean, we, we talk about recessions in these regions. But on the flip side, or, you know, on the positive side, they don't mean too much for met coal prices. What means a lot is really Asia, and in Asia, China and India. Japan, by the way, is quiet. South, South Korea is quiet. Having said all of this, it looks pretty dire.
It's probably one of the worst steel markets I've seen in a decade, at least. The premium global index sits at just under $250 per ton. We might have discovered a new floor. If I look back the last three months, it actually didn't drop, certainly not for a long time, below, below $230 per ton, you know? We, we probably in the premium segment, have found a floor, if I can say that. It sounds crazy, but $230 a floor. From here on, I think when India comes back, after the monsoon season, which should be in September, we probably see an uptick in demand.
Then China, they had wet weather issues in northern China as well, or to be quite honest, across China. When China comes back, we see more demand out of China. China definitely has to do something about their economy. It's pretty much down, you know. Youth unemployment rate is 21.3%. Housing sales came down 28%, and they talk about the consumer price deflation, you know? There, there needs to be some stimulus, particularly in the real estate market in China, that will bring up steel, steel prices, steel demand, and then met coal prices as well. I'm a little bit more positive about the second half.
Very helpful. Appreciate the discussion there, guys. I'll leave it there. Best of luck in the second half.
Thanks.
Thank you.
Thank you. Your next question comes from Paul Young, from Goldman Sachs. Please go ahead.
Morning, Doug. Morning, Gerhard. Hope you're both well. Your result was largely pre-reported, so I won't ask about your financials per se. Doug, maybe a question on Buchanan. I'm really interested in the progress in the on that asset. The U.S. assets actually did really well when you look at segmentals in the half, and I saw you spent $65 million in CapEx in the half in the U.S. I presume mostly at Buchanan on the second set of skips and the and the extra stockpile areas, et cetera. Just a couple of questions on Buchanan. One is that how long, how much further, or how much more money is to be spent at Buchanan, I should say, on that project?
From a production perspective, I know you've given the combined production of Buchanan and Logan, but, you know, Buchanan was doing sort of 4.5 million tons of production, you know, back in 2017, 2018. Will the second set of skips get Buchanan back to that sort of level from a saleable production standpoint?
Firstly, Paul, yeah, thanks very much. The projects are both well on, on time and on program. Breaking it down to the detail that you're asking for on how we're going with the spend to date and what's full, full cost of spend is not what we'll do on these calls from a information share at this stage. What I will say is, yeah, a large portion of these projects have long lead items that have to be committed to. Yes, quite a bit of the spend on the Buchanan, particularly the skips, is pre-committed because of the long lead item for the delivery of that, of that. Both are progressing to the extent.
The first being the raw storage area, that de-risks and de-bottlenecks the mine from an infrastructure and supply logistics to port and beyond, ensuring that we have sufficient capacity on the other side of the prep plant and on the raw side of the prep plant to ensure that we don't have any logistics impacted delays. The hoisting capacity is to increase the capacity that we have from the underground. As you've seen from our results, our underground performance is presently outstripping capacity. The additional skips will start matching and then improve upon our present capacity capabilities. Finally, answering your question around, will that get us to historic performance? Yes, it will, and it will take the segment up to AUD 7 million across it and Logan.
Yeah, thanks, Doug. That, that's, that's good, that's good, good information there. I can sort of turn it, go away and sort of, confirm numbers on our side. Thanks for that. Next question is, is around, guys, the M&A piece, and I know you get asked this every, every call, but a couple of things I want to ask specifically, and that is, with respect to, you know, what you're looking at at the moment, and the way you're looking at transactions, are you seeing, are you seeing demand, from steel mills, particularly India and elsewhere, to form partnerships?
Partnerships is interesting. All of the steel mills, we actually caught up with two of them this week. Tata's CEO is in town. We had some time with him and his team on Monday. They're all reflecting a long-term demand for our product. They know our product. It meets their present need and also their expansion projects that they've got going. They're looking for surety of supply. We're keenly interested in our organic projects in the U.S. and Australia to meet their needs going forward and relationships working beyond that. Their aspiration is to secure supply and ensure that we have the wherefore as a business to keep meeting that.
Partnering in M&A opportunities, is not a topic, that we discussed, probably because both businesses respect the processes that are afoot and the confidence that's required in that regard.
Yeah. Thanks, Doug. Then just lastly, the part B to the question on M&A, and that is around, you know, Federal and Queensland state governments, you know, preferences for or views on the origin of major shareholders of those companies involved from a third perspective. Are you getting a sense that that's quite a sensitive sort of debate or, you know, could be a final sort of decision-making process from, particularly from both those governments around, you know, where they want to see the industry go from a, from an ownership standpoint?
I think commenting on other people's businesses regards FIRB is not prudent and not where I'd want to go. Our own business, we've proven that FIRB supports us and understands what we are. We don't see issues in that regard, but like everybody else, we'll follow the approval requirements.
Okay. Thanks. Thanks, Doug. Thank you.
Thank you. Your next question comes from Glyn Lawcock from Barrenjoey. Please go ahead.
Good morning, Douglas. Douglas, can I just ask you, did you, early on in the call, say that the 60% of free cash flow is a certainty at the end of the year, or is it still going to be subject to whether you're still looking at M&A?
No, it's subject to, you know, obviously, the board will make the decisions around special dividends. What they will consider is where the market at, where our operations are at, our growth organically, and if we are and do pursue inorganic, that will be considered as well. No.
There is this inventory, I can't sell it, right? I need to phase it forward to October and November, and that's what we're looking at right, right now. If we can achieve it, then we can definitely hold the, the cost guidance as well. That's the plan right now. I t is possible.
All right, cool. Maybe just a final question, just following up on the first part of my, my questioning. Do you think you can, you'll finalize by the end of this calendar year, then in time for the final dividend, your, your inorganic opportunities, or do you think it probably can take longer?
I think so. That's definitely possible, and that if there's anything like this, that, that would be intended, yes.
Okay. You're basically saying, you know, the external opportunities that are out there could come to a head before the, before the declaration of the final dividend, or do you think it goes past February?
At the moment, we expect this, we have more clarity on the dividend by December, for sure.
Yeah.
Okay. All right. Thanks very much.
Thank you. Your next question comes from Dim Ariyasinghe from UBS. Please go ahead.
Thanks, Dim. Maybe just a quick one from me. I'm just filling in on Mark's behalf. A lot of questions have been asked already, but just maybe turning to the market. You mentioned positive tailwinds in the second half.
... I just want to dig into that. For us, you know, we are seeing China steel mills starting to receive directives to cap output. Just wondering, obviously, it's not a big part of the market or your market, but if, if you're seeing anything on that and whether that's, that is the key downside risk for prices for the half?
Twofold. It's a good question. Yeah, no, we hear something similar. They have capped output for many reasons. One is, you know, emissions reductions, safety, safety reasons, and other things, you know. I think, when you look at the previous two years, they always tried to cap production. It was kind of difficult to achieve. When, when we look at production levels, steel production levels for China, for this year, probably they will hit, hit the same number as last year. That's number one. Number two is what we will see in the future, I believe, is that China will outsource their CO2 emissions, particularly to Indonesia.
I can see that Indonesia is building more coke, ovens, and then, China starts importing that coke out of Indonesia. Therefore, the demand will, will come probably more, out of Indonesia than China. That might be the beginning of that. No, I don't know. In the future, I definitely see that trend.
Yep. Okay, cool. I'll, good. Thanks.
Thank you. That does conclude our Q&A session. I'll now hand back to Douglas for closing remarks.
Firstly, I'd like to thank everybody for taking the time to dial in and partaking in our investor relations call. If you've got any further questions, please don't hesitate to pass them through to our investor relations team, and the details for them is provided. I'd also like to take the opportunity on behalf of the board, the executive team, and myself to thank all the employees in Coronado. The safety results delivered sets the ethos of the business, that everybody feels safe in the work environment, so we can deliver the great results for you, our shareholders. For that, I'd like to raise my voice of appreciation to all. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.